Shares of Sirius XM Holdings Inc. (NASDAQ:SIRI) continue to break higher, up roughly 5% in the past few days to send SIRI stock up about 20% for the year-to-date.

Investors want to know the reason for Sirius’ recent popularity, especially since last week’s rise occurred on relatively no important news. Obviously, rumors about Sirius buying Pandora Media Inc (NYSE:P) have made headlines lately. Liberty Sirius XM Group (NASDAQ:LSXMA) CEO Greg Maffei, who insists Pandora is worth only $10, has opted to negotiate in public.

But that hasn’t stopped SIRI stock from rising as much as 13% from a low of $4.75 since a New York Post report suggested that the two companies have held private discussions.

The Pandora Effect

The potential synergies between the two companies underscore why John Malone, the chairman of Liberty Sirius XM Group, would want to make a deal. The two companies have yet to officially comment on the matter. Nor have they shaken hands on a price. But reports suggest that a bid could come as high as $12 to $13 per share.

While Malone is notorious for his unwillingness to overpay for assets, even on the low end, a $12-per share bid assumes potential premium of 30% for Pandora.

While that price should be celebrated by Pandora shareholders, SIRI owners would love the fact that Pandora comes $3 cheaper than the $15 per share it was offered a year ago, according to the Wall Street Journal.

But that reason alone isn’t the main factor driving SIRI stock higher.

Pandora — under Sirius ownership — could be worth twice that amount for Sirius shareholders. There’s no question that Pandora, with active listeners of 76.7 million, boasts a solid user base. But the service makes no money.

Under Sirius, however, which has proven to be a cash cow, Sirius/Pandora would form a strong combination that can better compete with with music services from Apple Inc. (NASDAQ:AAPL), Spotify and Alphabet Inc’s (NASDAQ:GOOGL) YouTube.

Another Reason to Like Sirius XM

In the same week that billionaire investor Warren Buffett, CEO of Berkshire Hathaway Inc. (NYSE:BRK.A, NYSE:BRK.B), reportedly acquired more SIRI shares, SIRI stock reached more than 252.1 million shares in short interest, rising from the previous settlement date. That figure, which has risen four times this year, represent about 17% of the total float.

And here’s the thing: The days to cover those short shares surged from about 5.7 days to almost 10 days. This is even as the average daily volume declined.

In other words, as Warren Buffett is buying more SIRI stock, where his stake rose to 172.32 million shares on March 31, from 166.639 million shares at the end of 2016, short sellers are — by their actions — inferring that Buffett, who also owns 32.55 million shares of the Liberty shares tracking Sirius XM, doesn’t know what he’s doing.

Bottom Line for SIRI Stock

As an aside, it has been 19 days since Pandora received $150 million investment from KKR & Co. L.P. (NYSE:KKR), during which Pandora said it will give itself 30 days to sell. Given last Friday’s volume of 40 million in Sirius XM — 50% above its average volume — it’s possible the market expects a deal to be reached sometime soon.

Given the momentum seen in SIRI stock, these shares are poised to surpass $6 by the end of the year, delivering 15% additional gains.

As of this writing, Richard Saintvilus was long SIRI.